Unambiguous figures needed on used values
SIR – Manheim has recently had a number of conversations with confused customers following the last two editions of Fleet News in which you have reported on used car values.
These articles appeared under the headings ‘Mixed opinions on 2006 start to used car market’ (Fleet NewsNet, February 15) and ‘Defleet prices hold steady at auction’ (February 9). Both referred to the latest market reports from Manheim and BCA and draw attention to BCA’s reporting on the exceptional health and rising residual values of ‘nearly-new’ cars.
I was not surprised that our January 2006 Market Analysis report concurred with BCA’s findings regarding the relative stability of the values of three-year-old plus vehicles in 2005. However, I was very surprised to read that BCA claims values in the ‘nearly-new’ sector were markedly improved, highlighting a significant upturn in average prices in excess of £2,000 over the last 24 months. This includes a 10% rise (nearly £1,100) in 2005 alone on an average vehicle value of just under £11,000.
Although not reported by Fleet News, on looking further at the analysis, contributing factors are explained by a ‘change in model-mix and strong demand from buyers’.
Manheim’s own analysis shows that residual values for this age bracket have been under pressure throughout 2005 and we actually report a fall in values of these younger cars of 4.3% in 2005 over the previous year, on sale prices averaging £10,700.
Supporting this, only three weeks ago Glass’s Guide published its latest extensive research which also reported a fall in average values of one-year-old cars during 2005 of around £500.
On average sale values of around £11,000, this equates to a drop of just under 5%. Talk to any of the late-plate wholesale and retail specialists and they’ll tell you the same story about a reduction in real value terms.
The point I make is not that reports from different remarketing companies should always be the same.
However, what’s important is that, in such a sensitive market, clear and unambiguous reporting is essential, as key buying and selling decisions are made on the back of intelligence produced to guide the market.
An implied claim that a market sector is in buoyant shape when it is under intense pressure is puzzling – particularly when it’s contrary to other credible sources.
Prices achieved at leading auction houses vary only marginally and we all feed results into the used car price publishers, so there should not be any significant discrepancies in this area. In Manheim we look at the market across a number of different channels, including physical auction, online sales and the direct wholesaling of late plate cars. Our analysis shows the same pattern in all of them.
So the reason behind this reported significant rise in the values of ‘nearly-new’ cars at BCA in 2005 can only be a marked change in model-mix, which is likely to include new model derivatives, coming into the market for the first time as used cars.
To ensure the true market dynamics are properly reflected there should be a detailed explanation to make this abundantly clear in the reporting. If BCA were to factor model-mix changes out of their analysis, the year-on-year position would undoubtedly look considerably different. To suggest substantial rises in the market values of ‘nearly-new’ cars in both 2005 and 2004, without fully explaining the anomaly, is potentially very misleading. It is also likely to create a false sense of security in market conditions which many observers feel will get even tougher this year.
No doubt this debate will continue, as will Manheim’s commitment to producing clearly explained analysis – be it good and/or bad news.
ROB BARR,
Group communications director, Manheim
Cunning plan? More like tosh!
SIR – Regarding Andy Robson’s letter ‘Curbing fuel usage: I have a cunning plan’ (Fleet News, February 16). What a load of old tosh!
What of the poor blighter – my fleet engineer – with a mileage cycle that is mostly urban and has to venture out on to extra urban roads at times that coincide with morning and evening peak traffic flows to come to work?
Only after this does his motoring begin to reflect ‘average’ as he goes about his customer and client visits.
He would quickly tell me where to stick Baldrick, Blackadder and Balderdash and Piffle if I asked him to achieve 54.3mpg for full reimbursement!
With best-buy local diesel prices averaging 91 pence per litre and business mileage paid at 9ppm he seeks to drive as economically as possible anyway and would need to average 46mpg to break even.
What does he drive? You’ve guessed it, a 307 SW SE HDi 110 – Robson’s own car. Can he do the 46mpg? Just about, but reaching the manufacturer’s figure of 55.3 or Robson’s average? No way. And believe me, he tries.
BRIAN BRIDGES
Fleet services manager, Suffolk County Council
It’s money before safety
SIR – I was amazed to read about the salesman who was allowed to keep his driving licence after amassing 31 penalty points (Fleet News, February 16). Will he get a special prize after clocking 40 points?
To be excused because of the ‘exceptional hardship’ the punishment would cause his family is outrageous.
It could be argued that any punishment for any crime could cause the offender’s family ‘exceptional hardship’.
The only reasonable way in which people can spare their families this ‘hardship’ is to not commit the offence in the first place.
It seems more and more as if the only interest authorities have in road safety is how much money they can generate from people who speed, or make hand gestures at speed cameras.
LEE BAKER
Faccenda Group, Brackley, Northants
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